Index Ventures invests in PeoplePerHour as business flows East to West

[UK] PeoplePerHour.com, the online marketplace for freelancers, has closed an interim funding round with Index Ventures who participated on equal terms with existing shareholders. The actual amount remains undisclosed, but our sources say the figure is in the region of half a million pounds.

Until now, the London-based startup had been funded to the tune of £425k by its founders and prominent angels, including Michael van Swaaij who while at eBay was responsible for starting its European operation.

PeoplePerHour originally opened as a beta in 2007 with the aim of replicating the US model created by the likes of Elance, Guru and Rentacoder.com back in the 90’s. Since its wider launch in 2008, however, the company says that it’s seen a slightly different market emerge whereby the site, which claims a community of 40,000 freelancers, is appealing to home-workers and ‘moonlighters’ offering of a range of services, not just those found in traditional freelance sectors like IT.

To hammer home the point, the company has added a new section to its website called the The PPH Economy where they’re publishing real-time data from their 51,000 small business users.

The data derived from PeoplePerHour shows some interesting trends, says the company.

Despite having freelancers in 150 countries, 80% of the jobs awarded on the site go to freelancers in the UK, with India being second with just 10%.

Marketing & Sales is the most popular service category ahead of IT & Web, which is another difference with some of the incumbents of the space.

PeoplePerHour thinks that this is part of a shift in the way companies use freelancers, which is now core to their business plans, especially for small businesses that operate as ‘virtual’ companies.

Outsourcing to freelancers is no longer just about getting the cheapest solution possible.

15% (and growing) of PeoplePerHour’s clients are now in emerging economies who are looking to hire experts in the West – a reversal of the offshoring trend that has dominated this space since
the nineties.

The key takeaway from of all this is that as economies develop in the East, more business is flowing the other way.

“As emerging economies in the East expand and develop their small business sector (which in many cases still doesn’t exist), they will require more talented professionals to bring in expertise and best practices from the West”, says CEO Xenios Thrasyvoulou.